2008 year-end estimates and actuals: Capital gain distributions, qualified dividends and special dividends
Other pages
- Capital gain distributions
- Qualified dividends
- Special dividends
On this page:
Qualified dividend estimates
Funds that invest in stocks of U.S. corporations and certain corporations based outside the U.S. pay dividends that qualify for lower tax rates.
However, when a fund derives a significant portion of its income from sources such as interest, short-term capital gains and dividends from certain international corporations, a portion of its dividend does not qualify for reduced tax rates. Instead, that portion is taxed at ordinary income rates. Funds that derive all of their income from investments in bonds, money market instruments and non-dividend-paying investments do not pay qualified dividends.
Below are preliminary 2008 estimates of the percentage range of each fund’s dividends that qualify for lower tax rates. The final percentages for 2008 could vary. The actual amount of qualified dividends you will receive from your American Funds investments will be reported on Form 1099-DIV (mailed in late January 2009).
Funds expected to pay qualified dividends
(current estimated percentages of qualified dividends)
| Fund | Percentage range |
|---|---|
| AMCAP Fund® | —* |
| American Balanced Fund® | 50 - 60% |
| American Mutual Fund® | 100% |
| Capital Income Builder® | 65 - 75% |
| Capital World Growth and Income FundSM | 90 - 100% |
| EuroPacific Growth Fund® | 100% |
| Fundamental InvestorsSM | 100% |
| The Growth Fund of America® | 100% |
| The Income Fund of America® | 60 - 70% |
| The Investment Company of America® | 90 - 100% |
| The New Economy Fund® | 100% |
| New Perspective Fund® | 90 - 100% |
| New World FundSM | 90 - 100% |
| SMALLCAP World Fund® | —* |
| Washington Mutual Investors FundSM | 100% |
*This fund is not expected to have taxable income to distribute in 2008 and therefore is not expected to pay dividends this year.
Taxes on qualified dividends
Legislation enacted in 2006 extended through 2010 the favorable tax rates that apply to qualified dividends. These rates had been set to expire at the end of 2008.
- For individuals in tax brackets higher than 15%, the tax rate on qualified dividends is 15%.
- For those whose tax brackets are 10% or 15%, there are no taxes on qualified dividends through 2010.
You will be notified on Form 1099-DIV (mailed in late January 2009) of the total dividends — both qualified and nonqualified — paid by a particular American Fund.
For more information about dividend amounts and ex-dates, visit Historical Prices & Distributions or contact your financial adviser.